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2-Star Stocks Poised to Plunge: DeVry?

Market-lagging returns could be written in these two stars.

Based on the aggregated intelligence of 125,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, education provider DeVry(NYSE:DV) has received a distressing two-star ranking.

With that in mind, let's take a closer look at DeVry's business, and see what CAPS investors are saying about the stock right now.

Over on CAPS, fully 18 of the 70 All-Star members who have rated DeVry -- some 26% -- believe the stock will underperform the S&P 500 going forward. These bears include TSIF and TheHuney, both of whom are ranked in the top 5% of our community.

Last month, TSIF wrote that "there are too many online 'degree-granting diploma mills' for this economy. ... The economy lends more to traditional schools when people are laid off and employers are cutting back."

In a pitch from two weeks later, TheHuney further educates our community on the many dangers of DeVry:

Is there a for-profit education bubble? Take a look at [Strayer], [Apollo Group], and [DeVry] and all three look overvalued. DeVry appears to be the least aggressively valued of the three, but still seems a bit overpriced at $60. ... The for-profit education industry conceivably could suffer quite a bit in the future as more traditional universities offer online programs for much lower costs. Plus, who wouldn't rather have a State U. degree than a DeVry degree? ... Also take a look at the insider transactions and it appears there is a good deal of selling going on. ... My own valuation of this comes closer to $34. I'm going to set a downward target on this at $40 and go with underperform.

What do you think about DeVry, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 125,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.